As American companies continue to eliminate pension benefits, many people are concerned with affording retirement and determining how much would be needed to finance a comfortable retirement. Financial planning for retirement often requires one having to go to separate specialists such as financial planners, accountants, stock brokers, mortgage brokers and the like, to get detailed and accurate information. The costs of such separate representation and engagement can be quite expensive and time consuming to have to engage multiple professionals to get the necessary financial advice.
Various surveys have found that when asked their top financial goal, a majority indicates their top goal is being able to afford a comfortable retirement, and when asked their greatest challenge with respect to retirement planning, it is calculating how much they will need to finance it.
It is a commonly accepted fact that even a person with both a pension and social security will need additional income to maintain a comfortable lifestyle. For some, that income can come from continuing to work either full or part time, but that is not an option for everyone; many Americans are unable to work in their later years due to either health issues or lack of skills needed by potential employers. But for those who do not want to depend on charity or government programs for their daily needs, the gap between benefits received and income needed requires income from personal investments.
Retirement planning calculations can be done using a financial calculator, a spreadsheet program such as Excel, a web-based calculator, or with the assistance of a financial advisor. The problem with using a financial calculator is that many users lack the knowledge of what information needs to be entered with which keys to make the calculations easy. The problem with using a spreadsheet program is that most people do not have the financial training to know what formulas to use to create the spreadsheet.
The problem with web-based calculators is that they are very generic, and either make assumptions about retirement factors that may be applicable to each user, or do not allow sources of income such as part time work, mortgages, lump sum receipts, or expenses, different inflation rates on different expenses to be entered into the calculation. The problem with using a financial advisor is that the cost for an analysis, and the potential for pressure to make investments, may be high.
An alternative to hiring professionals would require one to educate themselves in a vast number of specialties that could include buying resources such as books, CDs (compact discs), tapes, educational classes, and seminars. These educational costs would also be quite expensive and time consuming to the user.
Also, most individuals do not have the training or skills to double check professional advice and their calculations and projections. Additionally, individuals do not have the ability to double-check the results from using educational materials.
Several attempts have been made in the prior art to provide easy methods and apparatus to perform financial calculations for retirement planning, wealth accumulation, pension analysis, mortgage comparison and education funding but significant disadvantages remain.
A general-purpose calculator capable of performing interdisciplinary business calculations is described in U.S. Pat. No. 3,863,060. Although the calculator has keys that can perform the intricate calculations related to retirement planning, the use of the calculator requires substantial knowledge of the application of financial formulas.
U.S. Pat. No. 4,232,367 describes a calculator designed specifically for computing minimum principal payments for deposit into savings accounts and certificates of deposit. To perform calculations related to retirement funding needs with this calculator, if it could be done at all, would require extensive knowledge of finance and math, and an understanding of the formulas involved in retirement funding calculations.
A computer for calculating compound interest is described in U.S. Pat. No. 4,486,849. However, substantial experience and knowledge on the part of the user would be required in order to do even basic retirement funding calculations.
U.S. Pat. No. 5,222,019 describes a calculator capable of performing and displaying financial calculations, such as present and future values, related to retirement planning. But the calculator requires the user to understand what value is to be entered for each of the function keys and substantial financial knowledge on the part of the user. While the calculator appears to have the capability of doing the required calculations, it would not be easy for someone who lacked significant financial training to quickly and easily do the necessary calculations to determine retirement funding needs.
A portable electronic financial calculator and planner is described in U.S. Pat. No. 5,245,536. Although the calculator can solve problems relating to loans, savings and the like, the calculator cannot take into account the many variables related with retirement funding calculations.
U.S. Pat. No. 7,062,458 describes a computer-based method for a financial advisory system. Although the system allows users to trade off among different input decisions, it is a system regarding feasible and optimal portfolio allocations using a specified set of investment products. '458 system limits the assumptions to those of specific products. It does not allow the user to make individual assumptions or take into account other sources of retirement income that can affect the amount of personal savings needed to achieve a defined retirement goal. It takes control of the planning process away from both the advisor and the client, and focuses on a specific portfolio suggestion, not retirement calculations. Moreover, the '458 system is designed for the sophisticated financial advisor and not the casual user.
None of the above prior art provides, for a person with limited experience in the field of financial and retirement planning, the capability to perform the calculations involved in computing retirement funding needs along with the flexibility in assumptions used to make such computations. Thus, the need exists for solutions to the above problems with the prior art.